While the market cheers on the fantastic job “growth” of March 2010, the more astute of us are concerned with a growing tide of personal bankruptcies. March 2010 saw 158,000 bankruptcy filings. David Rosenberg of Gluskin-Sheff notes that this is an astounding 6,900 filings per day.

This latest filing is up 19% from March 2009’s number which occurred at the absolute nadir of the economic decline, when everyone thought the world was ending. It’s also up 35% from last month’s (February 2010) number.

Given the significance of this, I thought today we’d spend some time delving into numbers for the “median” American’s experience in the US today. Regrettably, much of the data is not up to date so we’ve got to go by 2008 numbers.

In 2008, the median US household income was $50,300. Assuming that the person filing is the “head of household” and has two children (dependents), this means a 1040 tax bill of $4,100, which leaves about $45K in income after taxes (we’re not bothering with state taxes). I realize this is a simplistic calculation, but it’s a decent proxy for income in the US in 2008.

Now, $45K in income spread out over 26 pay periods (every two weeks), means a bi-weekly paycheck of $1,730 and monthly income of $3,460. This is the money “Joe America” and his family to live off of in 2008.

Now, in 2008, the median home value was roughly $225K. Assuming our “median” household put down 20% on their home (unlikely, but it used to be considered the norm), this means a $180K mortgage. Using a 5.5% fixed rate 30-year mortgage, this means Joe America’s 2008 monthly mortgage payments were roughly $1,022.

So, right off the bat, Joe’s monthly income is cut to $2,438.

According to the US Department of Agriculture, the average 2008 monthly food bill for a family of four ranged from $512-$986 depending on how “liberal” you are with your purchases. For simplicity’s sake we’ll take the mid-point of this range ($750) as a monthly food bill.

This brings Joe’s monthly income to $1,688.

Now, Joe needs light, energy, heat, and air conditioning to run his home. According to the Energy Information Administration, the average US household used about 920 kilowatt-hours per month in 2008. At a national average price of 11 cents per kilowatt-hour this comes to a monthly electrical bill of $101.20.

Joe’s now down to $1,587.Now Joe needs to drive to work to make a living. Similarly, he needs to be able to drive to the grocery store, doctor, etc. According to AAA, the average cost per mile of driving a minivan (Joe’s a family man) in 2008 was 57 cents per mile. This cost is based on average fuel consumption, tires, maintenance, insurance, license and registration, and average loan finance charges.

Multiply this cost by 15,000 miles per year and you’ve got an annual driving bill of $8,550. Divide this into months (by 12) and you’ve got a monthly driving bill of $712.

Joe’s now down to $877 (I’m also assuming Joe’s family only has ONE car). Indeed, if Joe’s family has two cars (one minivan and one sedan) he’s already run out of money for the month.

Now, assuming Joe’s family is one of the lucky ones (depending on your perspective) they’ve got medical insurance. Trying to find an average monthly medical insurance premium for a family in the US is extremely difficult because insurance plans have a wide range in deductibles, premiums, and co-pays. But according to eHealth Insurance, the average monthly premium for family policies in February 2008 was $369.

So if Joe has medical insurance on his family, he’s now down to $508. Throw in cell phone bills, cable TV and Internet bills, and the like, and he’s maybe got $100-200 discretionary income left at the end of the month.

This analysis covers all of the basic necessities of the average American household: mortgage payments, food, energy, gas, driving expenses, and medical insurance. It also assumes that Joe:

1) Didn’t overpay for his house2) Made a 20% down-payment of $45K on his home purchase3) Has no debt aside from his mortgage (so no credit card debt, student loans, etc)4) Only has one car in the family and drives 15,000 miles per year5) Keeps his energy bill reasonable6) Does not eat out at restaurants ever/ keeps food expenses moderate7) Has no pets8) Pays for health insurance but has no monthly medical expenses (unlikely with two kids)9) Keeps his personal budget under control regarding cable TV, Internet, and the like10) Doesn’t spoil his kids with toys, gadgets, trips to the movies, etc.11) Doesn’t take vacations.

Suffice to say, I am assuming Joe maintains EXTREMELY conservative spending habits. Personally, I know NO ONE who meets all of the above criteria. However, even if the above assumptions applied to the average American, you’re still only looking at $100-200 in “wiggle” room for spending per month!

If Joe:

1) Overpaid on his house2) Didn’t have a full 20% down payment3) Owns two cars4) Eats at restaurants5) Splurges on heating & A/C bills 6) Has any medical expenses aside from monthly premiums…

… he is running into the red EVERY month.

I also wish to note that my analysis didn’t include real estate taxes and numerous other expenses that most folks have to pay. So even if you are extremely frugal and careful with your money, it is impossible to “get by” in the US without using credit cards, home equity lines of credit or burning through savings. The cost of living is simply TOO high relative to incomes.

This is why there simply cannot be a sustainable recovery in the US economy. Because we outsourced our jobs, incomes fell. Because incomes fell and savers were punished (thanks to abysmal returns on savings rates) we pulled future demand forward by splurging on credit. Because we splurged on credit, prices in every asset under the sun rose in value. Because prices rose while incomes fell, we had to use more credit to cover our costs, which in turn meant taking on more debt (a net drag on incomes).

And on and on.

Does this mean the market is about to tank? Not necessarily, stocks have been disconnected from reality since November if not July. Bubbles (and we ARE in a bubble) take time to pop and this time around will be no different.

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with more information? It is extremely helpful for me. GoSeeqact tests

I would ask you all to focus on the big picture. Here is the short version. You are all slaves. Every one of you that supports the so called “government” by even one penny is partially responsible for the murder of millions upon this planet, as well as theft, fraud, and other crimes that are done in it's name.

Taxation is theft. Any entity that would presume to provide any service to anyone must pass the test of voluntary exchange. Almost all tax does not pass this test. It is not voluntary as you must pay some one or group even if you do not want any of their “services”. If you do not they will initiate force against you to take what they want and then some. Elections are are a tool of deception. They produce no contract and encourage people to view the world in a deceived way. You must never pay anyone for something you do not want to buy voluntarily. It is false that the things that need to get done will not get done unless some people are “forced” to pay them. That is a lie. Think it through clearly in your mind if you can. If you can't, ask for help from those who can explain it to you.

We make choices in life. The liars and cheats and murderers who call themselves “government” are very strong now as they have not been challenged in their crimes. Their organized looting has been going on so thoroughly and so long that things are about to collapse under the unsustainable weight of so many crimes in so many places. Criminals become more and more bold and more and more pervasive until they are stopped by the non-criminals or the natural laws of nature step in to cause their final destruction. If not challenged, ultimately everyone becomes a criminal and unending war among criminals ensues. Then everyone who has made their “deal with the devil” relearns a few basic moral lessons. Crime does not (ultimately) pay. You shalt not steal. You shalt not lie. Choose life that you may live.

You must stop using fiat money. It is the mother lie and deception that is the foundation of all organized crime that calls itself “government” on this planet. You must learn how to provide for yourself and others what you need to survive and do it through honorable voluntary exchanges; use gold or silver as money or something of value your neighbor will agree to. Anyone or group (government usually) that initiates force or deception is your ENEMY and the enemy of every decent person on this planet who is willing to live by voluntary exchange. Some parasites have the capacity to become productive and live by voluntary exchange. When you choose to feed the parasites you become partially responsible for their crimes. Friends, the bullies have multiplied. You must organize to defend yourselves. Surviving the storm by yourself is almost impossible. People of good will must organize to sustain each other. When you try to do this some of you will be attacked. Organize carefully. Get to know your actual neighbors again. YOU MUST! Perhaps you could introduce yourself and first find out if they are basically trying to survive honorably or by “government”. If things look promising perhaps you could show them a message like this one and ask them what they think of it? You must act and you must act fast. Time is short. Be encouraged. Ultimately there will be peace on Earth among men of good will.

I am encouraged that someone was riled enough to vote this post as junk. You might have some emotional energy at your disposal and future change is a possibility under those circumstances. I would be even more encouraged if you offered to explain why you feel it is junk. Maybe we could benefit from the exchange? Maybe you could convince others that what I write is “junk”. Could you explain your vote please?

I find absolutely nothing to disagree with in your post. The path for me has included Locke; we are all equal here on Earth, there is no subordination. Since there is no subordination, any exchanges between us that are not voluntary are criminal. Simple.

Just so that others are not confused, I like to explain what I mean by "equal". We are equal with respect of rights, in that they come from the same origin that man came from and are (unalienable) enate within him. The colonist were close to the solution but the "Hamiltons" snuck in.

There is nothing special about a group with guns that calls itself "government". It is a creation of people, a tool that some intented to preserve life, liberty and property but it inevitably attracts those who would use it as a different tool. That is why there should not be a monopoly of secruity or adjudication services in a region (usually refered to as "government"). It is not "governement" that creates man and thus it is non-sequiter to think that rights come from such an invention. SWR I would feel more secure having you as a neighbor.

Right on, that 50k is a pipe dream to alot of people. Most make less than that as you said even married. Single they would be making 10 11 12 bucks an hour. Our pay hasn't gone up with the REAL INFLATION (you know the one that doesn't take out that pesky food and fuel consumption, the two things that people can do without ;)), and now the corporate and govt. is trying to not let things deflate to their true prices. Much of the prices we see today was due to speculation, monopoly and inflation.

I swear I cannot determine whether you are really a clueless comic relief dunce or a paid dis-information troll.

There isn't going to be any economic "recovery" of the FIRE model - it's mathematically impossible. There can only be an economic miracle; this is what pretend & extend is all about.

Something, anything, needs to be developed to increase what Travis refers to as economicalness aka ROI. It can come in the form of huge new energy reserves priced at a comparable oil $USD/BTU ratio, tremendous breakthroughs in GM crop yields, and/or unimagined productive efficiencies in new, high-value goods & services.

To help explain these concepts, here's a brief economic history of California:

As most everyone knows, the discovery of gold set off an unprecedented gold rush. But what many people don't know is that gold was only the beginning of a major, resource extractive economic base.

The water & rail infrastructure requirements for oil, timber & agriculture laid the groundwork for the human immigration to follow. Employment was provided by the big 3 industries: first entertainment, followed by aerospace, then high tech computers & communications.

Each stage required successive layers of investment that were handsomely rewarded by fabulous output gains and productivity increases which dramatically increased the overall level of wealth.

Now, compare those previous cycles with the FIRE economic model that was based on nothing more than new (credit) money chasing older (credit) money. All those realtors, all those loan officers, all those transaction/legal workers, all that construction activity, all those home consumer items (kitchens, baths, etc) ad infinitum, was based on nothing new, nothing productive, nothing useful.

IOW, it was all based on nothing. Now, how is this supposed to 'recover'? It isn't supposed to recover! The bailouts and gross illegal activities are being undertaken in the name of national security simply because if something doesn't come up out of the blue, we are truly hosed.

Well, I was a fan of "simple" hot fusion (much more do-able) until I realized that abundantly cheap energy presents problems- it is, after all, how we've come to over-power the environment: energy is applied to "natural" resources, more energy means more pressure on the world's natural resources. The trajectory isn't a good one...

There are of course limited resources, but there are observable self-limiting influences on human population. Mature educated societies can barely maintain a positive birth rate, and many can't (Japan, for example). Abundant clean energy affects the recycling economics equation in a manner that makes recycling more attractive, helping to lessen demand for "new" materials, and makes new resources economically recoverable that might not have been otherwise.

Credit expansion can temporarily increase people's/business' ability to consume, thereby influencing production upwards, but real economic growth (ie: gains in efficiency, new technologies, more efficient allocation of capital) is needed to sustain an increased level of output in the long run.

Anyone who would be naive, clueless or disingenuous enough to call our currency economy in "recovery" would also logically have to call the convulsion of a cardiac patient's body after having the electric paddles applied as an indication that he was "back to health".

"There isn't going to be any economic "recovery" of the FIRE model - it's mathematically impossible."

Thank the gods, B9K9, someone who understands arithmetical relationships and how variables correlate (ain't too many of us left, evidently)!!!!

But as long as the various propaganda networks reframe every fact to their fiction***, few will comprehend that if the top five banks make up 63 percent of the GDP, and they are technically insolvent in the traditional assets versus liabilities model -- but only sustain themselves and their obscene bonuses by the aid of trillions in dollars of free Fed/Treasury monies plus TARP bailout funds (and further hidden bailouts, high freq. trading, constant and consistent ultra-multiples of wash sales) -- then, not even considering the remaining percentage of the fantasy finance sector (bringing their portion of our fantasy finance GDP to over 83 percent) -- this is the most back-ass-wards socialist plutocracy around!!!

Thanks, B9K9, always glad for any and all company in the realm of human thinking machines.

***latest Great Reframing: a soon-to-be media report showing that the OTS was either ignorant or not concerned with all the fraud-related predatory lending.

Completely ignoring all the documented stories of how the Bush administration, via the Office of the Comptroller of the Currency, and with the criminal collusion of the rating agencies, especially S & P and Moody's, did conspire to halt the individual state governments and consumer-protection agencies from intervening against said predatory, and illegal, lending practices --- by threatening to lower the state's bond ratings.

It goes way further back than Bush - more like 2,500 years & longer. I posted this reply to Mako on another thread which appears to be going stale. Same appeal for comments & suggestions applies:

***

Mako and others, I've been working on a short & succinct manifesto that has two-fold aims:

Address the defensive concerns Cognitive Dissonance has raised; and

Provide some sort of road map for the future.

I'm trying to tighten it up so that it provides a quick & easy read for any & everyone - informed and uninformed alike. Comments, criticisms & helpful suggestions would be greatly appreciated.

***

Don't allow yourself to be placed in a position of defending that which is obvious & self evident. It is the odious task of economic holocaust deniers to take the morally repugnant position of defending crimes committed against humanity.

The historical record of usury is quite clear, with specific admonishments dating back over 2,500 years:

(Exodus 22:25-27)25If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.

26If thou at all take thy neighbour's raiment to pledge, thou shalt deliver it unto him by that the sun goeth down:

27For that is his covering only, it is his raiment for his skin: wherein shall he sleep? and it shall come to pass, when he crieth unto me, that I will hear; for I am gracious.

The exponential math is irrefutable; compounding principal+interest always outruns loan serviceability. Thus, the end result is preordained: usurers take possession of forfeited real property and productive assets pledged as collateral while borrowers are reduced to a state of debt peonage.

Deniers are merely earning their respective thirty pieces of silver as paid apologists for their banking masters. Let deniers make ridiculous spectacles of themselves attempting to explain the unexpected hoocoodanode.

***

More to the point - it doesn't matter if the money-lenders' collateral is seized and re-distributed to the People. They still have their bullion reserves safely stored in Zurich & Tel Aviv, along with the ability to restart the money-credit game. Yet it doesn't really matter either if these countries are invaded and the respective gold holdings seized & re-distributed to national entities, because the money-credit game can still be re-instituted via pure fiat.

No, the real game changer, the one thing that would spell their ultimate doom, would be the permanent destruction of the money-credit system via some impersonal, scientific means of creating & maintaining a medium of exchange, unit of account, and store of value.

Nathan has the right idea with Freedom's Vision, but he is hopelessly naive in intent. It's about as rationale as arguing with Heinrich Himmler that it would really be a much better idea not to try & exterminate certain peoples.

The bankster's will never willingly give up their advantage. It will have to be taken from them and denied in perpetuity by permanent controls.

The reality is most, if not all, humanity is prone to bouts of laziness.

The compounding interest of usury spurs that laziness. Everybody cannot pass the buck. Some people may be able to pass the buck but someone has to pay for it and in an ever expanding bucket of thin air printed bucks, you need an ever expanding list of those that service the buck passing .

keep it simple. common sense and a map of the USD in decline, with a few websites tossed in for verification. Better yet to have some utube video and a one page flier. Many that i know will print and deliver across the usa. I will certainly help distribute as long as its not for demducks or the repugnants.

Is there, between either one of you, any recognition that ecomies hinge on not number theory, but physical resources, and exponential growth as applied to the consumption of physical resources is the real underlying issue?

Is there, between either one of you, any recognition that ecomies hinge on not number theory, but physical resources, and exponential growth as applied to the consumption of physical resources is the real underlying issue?

I cannot speak for others but in my opinion, yes...

Net ENERGY gains produced from the increased (exponential) rate of extraction and consumption of finite energy resources... All finite resources being mathematically impossible to consume sustainably but just as importantly, the rate of extraction cannot be increased all the way to the point of physical resource depletion (bell curve)... The exponential growth of credit required to sustain the ponzi has hit the brickwall of physical reality... Global rates of net energy production and consumption are falling (in developed nations anyway, for now). And as all goods and services we consume require energy to produce, transport etc. Each monetary units energy value is also decreasing (inflation/deflation, same thing).... Game over, bummer...

Also, keep in mind that most jobs that are actually here and actually get raises, those raises are pegged to the CPI which has been understated for years. Originally intended, I hope, to simply hide inflation to sedate the masses and enable skimping on entitlement program payouts, it has inadvertently destroyed the ability to consume in this country as our "leaders" would like us to. Whoops. I don't see any way out of this vicious cycle until public employees are fired, federal spending is slowed and private taxes reduced.

...gold was only the beginning of a major, resource extractive economic base.

The water & rail infrastructure requirements for oil, timber & agriculture laid the groundwork for the human immigration to follow. Employment was provided by the big 3 industries: first entertainment, followed by aerospace, then high tech computers & communications.

Now don't get me wrong, I'm as disgusted with the hopelessness of the current clusterphuck as many who post here. But it is good to test one's beliefs from time to time (one reason I like to read the comments of Leo and other contrarians here).

There is one thing to consider in the list you provide above. Each development or industry was followed by a new and profitable endeavor as the previous one ran its course and wound down. In such a string of successes, it is to be expected that occasional failures such as FIRE occur.

And just as it was impossible for the early entertainers to foresee the transition to computer and communications industry, it is difficult for us now to imagine what may come next. And it is precisely times of turmoil which breed the conditions that push people from comfort to innovation.

Not saying it's likely, or, given the impending supernova-scale phuckedness approaching, that it would be enough to reverse the slide if some new innovation such as zero-point energy generators or transmogrifiers or warp drive or those little gizmos in the cafeteria of the Starship Enterprise which make food out of nothing were to come about. Just saying that whenever I become as certain of anything as I am of our impending doom, it is usually time to step back and pan out, because nature and life are full of surprises.

Assuming that there exist any powers-that-be who are not corrupt (outside of the land of skittle-shitting, rainbow pissing unicorns), it is likely that they are trying to extend-and-pretend us towards just such an event. In my more optimistic moments such as this (rare and elusive as they may be), I hope they succeed. Because if they don't, its down to three day old leftover coyote for dinner and corn cobs for TP.

Funny Leo. This fits neatly with the anecdotal data of the pathetic Greek nymphs and playboys in the streets pissing away German productivity. I think the last time the "tough luck" or "let them eat cake" attitude became this pervasive was in the late 1700's.

We ain't talking protest in the US Leo. That is so French. One thing that must be remembered when comparing everyone else in the world to the USA....Americans are armed to the teeth.

"Let them eat cake?" NO. How about La Guillotine shall claim her bloody prize. And those holding US debt will have to kiss their ass-ets goodbye.

Leo, how is it that you do such brilliant work on pensions? Your solar picks tell me you are aware of peak oil....how can you ever insuniate we are in a recovery? Let alone that we will ever recover from the absolute pillaging of all things considered?

"Go protest and they'll haul your ass in jail." Thats our point! It appears you would welcome the NWO, but at the same time, tell us of the impending doom and gloom, and that it will be best to accept our given fate. To paraphrase your overall tense, "The shit is hitting the fan! But if you accept it, they will give you a cookie. The cookie is laced with mercury, but it tastes good. Enjoy!"

The US reached critical mass when its oil production peaked in 1970/1971. Mexico reached critical mass a few years ago when its oil production (Cantarell - third largest oil field in the world) peaked.

You make a blanket statement judging anyone falling into the category as a fool, and you're worried about him "exposing himself"?

Many people who would have never expected to find themselves in that category, either by children, divorce, death, loss or reduction of employment, or physical reason, now find themselves paying more than they take in, but trying to still make their bills instead of defaulting. Of course, you didn't make any allowances in your black and white statement - they are just morons.

And you too. If you bought a house worth a quarter mil, and only earn $50K gross, you are as stupid as the rest of those who did.

At most the house you bought should have been worth half that, or, $125,000 since you have such a tough time with the math.

And if you think life is lived with no possibility of one or all the accidents you mention in your post and quite a few others, then you are not only a c student, but dense as a 3 foot thick wooden post. And hopelessly naive.

Worried?? Worried??? About people who don't count on life throwing some curve balls at everyone now and then? I'm not worried, nor do I feel sorry for them. I cringe at how it's precisely people like that who went out and got loans that they couldn't shoulder during some emergency, living on the edge and THAT WE NOW ALL HAVE TO PAY FOR! That's not worry that's just plaind pissed off at the idiots who did it to the rest of us who might have had some common sense.

Rule of thumb is (at least as I've heard it) with a 10% down payment, you can buy at the *most* a house that is 3X your gross annual income.

If you're making 50k a year, you have no business living in a quarter million dollar house. It's that simple.

So that leads us to the conclusion that one of two possibilities are true: either a) the analysis in the article is flawed somehow and we don't really have so many average people living lifestyles they can't at all afford, or b) there are indeed a lot of fools around.

Sorry, I would have gotten back to you sooner but I work alot of hours right now.

I have no opinion on spending decisions that other people make. It is not my business. You somehow think that other people's decisions have an effect on your life. I recommend counseling for that. Or your rage will only grow larger and unmanageable.

I only support my family and myself. I will not go into details but I have children currently atending college that are not borrowing money to do so. So I know a bit about financial planning. Just a bit.

The assumptions that you make about people based on a single remark point to some very serious mental and personality disorders that will eventually consume you completely. That said, what are your opinions on healthcare? I am winding down this week and would certainly enjoy some more entertaining rants.

"I have no opinion on spending decisions that other people make. It is not my business. You somehow think that other people's decisions have an effect on your life."

Excuse me...!??! Do you live off the grid or something? Self sufficient in the wild? If so, that's awesome and no wonder you don't give a shit about other peoples poor decisions.

If on the other hand you're part of regular society, where is this paradise where you're not affected by other peoples idiotic decisions? I'd love to move there. It sounds nothing like the reality I currently live in.

If my neighbour bought his house when he couldn't afford it, then skips out on payments, then goes into foreclosure, which then has the bank wanting to offload the property, that affects ME. Suddenly my house is worth less because the asshole next door wasn't so hot at math.

If average Joe lives beyond his means, and this happens to such an extent that 'average joe' is the majority, it affects ME when they all get bailed out. Where do the bail out $$ come from?

When the government implements a program enabling 'debt forgiveness' on homes that are underwater because some idiot can't count, or thinks that his future is always going to be utopian, it affects ME - again, where do you think the money comes from?

These are just a few examples, bottom line is that other peoples bad decisions have a very direct, real and noticeable impact on my life every single day.

Why are you concerned about something that you have no control over? Other people's decisions. What can you do about it? Cry and bitch on a blog!!???

Go out in the neighborhood and preach to your woefully uninformed neighbors who have spent too much on their homes and cars about fiscal responsibility and see what you get: Punched in the face most likely. Or worse.

You don't like bailouts?

You don't like a total lack of regulatory oversight which allows all corporations, not just banks and insurance companies to trample the consumer?

Wake the fuck up. Vote them out or shut the fuck up. Or better yet run for office yourself or find a good candidate to support and spend time and money doing it. And stop your God damn whining.

And don't forget to make at least six or seven more moral judgements before you go to bed tonight Ned.

"Why are you concerned about something that you have no control over? Other people's decisions. What can you do about it?"

What can you do about it? How about demand responsibility and accountability. Not sure about you, but I was raised such that both of those were pretty damn important. Responsibility meant that you point the finger at yourself first and foremost when you screw up and accountability meant that you paid the price before asking for a handout. How about try to educate the people around me as to the lunacy going on? Or I could just sit around, not voice my opinion and take it up the ..

I don't need to preach to my woefully uninformed neighbours, I just shouldn't have to PAY FOR THEIR FUCKUPS. Honestly, I don't give a shit if someone gets an interest only loan on a house 20X their salary, so long as when their stupidity is looking for someones ass to bite it gets busy on theirs. These days though it doesn't. Homeowner fucks up, Gov bails them out. Banks fuck up, Gov bails them out. Industries fuck up, Gov bails them out. COUNTRIES fuck up, Gov bails them out.

As for not liking "total lack of regulatory oversight" wtf are you on about? Responsibility and accountability extends to EVERYONE. I don't care if you're a CEO, or a politician, or some clown up the road that can't afford his house. If you fuck up, why should I pay the price.

You want me to wake the fuck up and vote them out? Who the fuck would you have me vote in? You really think it would all be any different if it was McCain, Kerry, Palin, Romney or one of these other one party with two names asshats running the show?

Stop my whining? It was you who got their knickers in a knot of someone else saying that a person that earns $50k but buys a $250k house in an idiot. Other posts you seem to insinuate that you're not in that position yourself, so wtf do you care if these idiots are labeled as such?

"demand responsibility and accountability" You are becoming a actual cartoon at this point.

You seem to have an answer for everything but not one that actually makes a point. You don't need to preach to your neighbors because you know they will leave you broken and bloody on the sidewalk. It's much more fun to look up and down the street from your window lamenting at what an idiot everyone but you is.

"I was raised such that both of those were pretty damn important" Well woooweeee!!!

"You want me to wake the fuck up and vote them out? Who the fuck would you have me vote in? You really think it would all be any different if it was McCain, Kerry, Palin, Romney or one of these other one party with two names asshats running the show?" Why are you asking me for advice? You think I am an irresponsible moron like your buddy anony who pretty much hates everybody and blames everybody but himself for everything. Sound familiar?

"so wtf do you care if these idiots are labeled as such?" It's actually pretty simple. I don't like people that come across with superior attitudes and degrade people that make mistakes. And when that is not enough, call them idiots and fools and pile it on some more by saying "these deadbeats are costing me money". You really don't know a thing about the foreclosure process or what is going on in this country right now. No one is going to get bailed out. No one is going to get principal forgiven. The banks or their agents are buying the homes at the foreclosure auctions and they are re-selling them. It is not costing you, anony or any other taxpayer (I assume you pay your taxes?) anything.

But continue to believe the propaganda that says people will be bailed out of negetive equity positions. It makes you look that much more intelligent.

The banks are the ones enjoying watching the "citizens" degrade each other and point fingers at each other while they grow more and more wealthy.

Since you live in such a great neighborhood with well informed neighbors that think just like you, there should not be any foreclosures at all and property values should stay higher than the surrounding areas where uninformed citizens will be losing their homes, no?

"You're delusional. Do you honestly think that when so many live beyond their means it doesn't have a negative affect on everyone? You must be a big fan of current government policy then..."

My belief actually is that current federal government should be cut by close to 50% and state governments around the nation anywhere between 10% up to 30%. So it looks like you are wrong agin unfortunately. I would not be able to do my job well if I was delusional and since I have been doing it very well for close to 30 years (buzzer sounds) you are once again completely wrong.

As I have said, you do like to call people stupid and have the last word. I am right about that. Anyone who is not a conservative thinker like yourself must be a delusional idiot.

I think this banter has come far enough. Let's get together for a personal meeting. What do you say?

"I think this banter has come far enough. Let's get together for a personal meeting. What do you say?"

I hear NJ is lovely this time of year. I'll head on over just as soon as I can figure out why the F that would be anything more than a complete and utter waste of time. I've already wasted enough time taking the troll bait.

Friend, you chose to jump in on anony's behalf and start in. I did not tell you to do so. 3rd man in on a hockey fight goes for 5 or a GM.

I lived in NJ for the first half of my life but I live in CO now. I have no reason to lie about it. It is you that have the problem, no? You act like a total middle school jerk off: "No you don't live there, you live someplace else" How am I a hypocrit? Because I like to fuck with know-it-alls that call everyone that does not believe what they believe stupid idiots??? How pathetic it has to be for you to look in the mirror? I pray you have not multiplied yet but I have to think that is too much to hope for.

Whether or not I'm shit is irrelevant because I'm not in the position you are in or one that you apparently support of buying a house you can't afford by a factor of two. At least.

The only ones suffering are those who put their families thru that insanity, foolishness and disregard for their futures. I'm doing just fine with a house that I can easily afford to double in size should I be crazy enough to do so. The rest of us are supporting that and it's good damned thing we do even if forced to do so. But that doesn't make you morally superior.

If you don't like my tone, then ignore my posts. You're good at ignoring the obvious.

You still assume that because I responded to you in any way at all that I live in a house I can't afford and my family is headed for a terrible time that will border on insanity? You also seem to think you are in some way supporting people that have bought homes that they could not afford.

You are a puzzling individual. But then, I am not a health care professional so I can't begin to evaluate what your problem is. I do know big pharma has identified your profile as a "prime customer".

What kind of insanity do you put your family through as a result of your numerous (apparent) mental disorders? You don't even see it I am sure.

And you too. If you bought a house worth a quarter mil, and only earn $50K gross, you are as stupid as the rest of those who did.

I don't agree with you much of the time, but on this I agree 100%.

Cry me a river if you spent more on a house than you should have, then fell on hard times. There's a reason you buy less than you can - if you fall on hard times you'll still be able to cover it.

I'm on target to pay off my twenty year mortgage in TWO YEARS. The crazy thing is that when I was applying for the mortgage I opted for the 20 year over the 15 year, just in case something happened to my ability to pay down the loan. Luck would have it I've been quite fortunate, so the loan is almost gone. But, I was prepared for the worst.

Meanwhile, I've been prudent to the point of excess while others are living rent free in the houses they should never have bought because they got a loan they could only in the best of times pay.

I really care more about people that know very little but put up avatars of a person holding a gun on blog sites as if they think it somehow frightens others. I view it as a challenge. And to be quite frank with you, I have no respect for people that carry on with this "don't fuck with me I might shoot you" routine. They are mostly cowards and go down quick. Then they usually cry for the cops and a lawyer.

People will make mistakes and buy things they can't afford. That is not my objection. I state my objection clearly above so go read it.

No one cares to hear about your decisions on your mortgage maturity. If you understood a thing about finance you would know why there were so many mortgage products on the market before the collapse. Here's a clue: not everyone stays in the same house for 20 or 30 years due to family and career changes. Here is another clue: Some people actually know how to analyze trends and will go ARM or IO knowing that rates will be lower in 24 or 36 months. Sadly, since most consumers buy based on payment amount, not on sound analysis and most mortgage brokers just want to close a deal, people end up in a loan that is a bad fit.

The sad part is that you feel the need to call everyone stupid, 12, delusional, idiot etc. etc. etc. You completely avoid the facts stated about the foreclosure process that I stated above and go right for "delusional big government socialist" insults. Your arguments have no substance and you as a person have very little substance.

Great link, saw the movie. However, you could have chosen many of the pictures contained in that link for your avatar but chose one of an unidentifiable person holding a gun.

I do not believe I am on any high horse. I do believe that you like to call people stupid idiots on blogs and it fills some insecurity that you have. I also believe that I like to call people like yourself and anony out on these blogs. And I have done so on many occasions.

But you seem to require the last word no matter what or why so again, I think the only real resolution is to get together for a personal meeting. Bring anony along too, it makes it much more fun for me.

I would argue the greater fool is the one making the loan to the prospective low-wage McMansion owner. Look, this whole mess has been about banksters robbing sovereign nations of their wealth. Moral hazard is everyone's game right now.

I would argue the greater fool is the one making the loan to the prospective low-wage McMansion owner.

Not really, if you know you are going to "sell" the loan to someone else who will then rebundle it and sell it again to a bunch of different someone elses, who will hold or sell or whatever, far removed from you... No, if you have no conscience, it is not very foolish to sell those loans at all.

People who are clueless believed the scumbags making the loan.This occurred at an unbelievable rate.I am old enough to remember a time when the originator was the servicer of the loan(imagine that).But as MS points out these criminals originated FAIL notes then kicked the can to the next level...and got handsomely compensated to do so!

I don't blame the average upside down on his ball and chain homeowner as much as I blame the loan sharks, given education in the US today.The suckers had no idea what a doom note they were signing...even given the "disclosure" required by law.They just got had.

The number for the house was one restricted by considering a mortgage amount of 3X gross income. That would get the family into one at about 200K. However, the 5% home loan has made it more affordable so the mortgage and price can be a little higher. I'm not sure they really get more other than a more inflated price for the same 1500 sf.

The example ignores the SS bleed. However, it is also likely that they may owe less income tax with some ability to itemize because of the loan interest.

But, let's not forget that many more were led to believe that it was actually possible to retire: about 20 years ago the majority of folks in the US probably thought so; and, given the distorted (read "over-pitched") presentations by the FIRE sector all looked rosey, at That time. Things change, and given increasing populations and diminishing resources it's a sure bet that they won't change for the better (chances of retirement improving for more people).

Most will not get a chance to 'work' beyond 65; with fewer and fewer jobs, more technological oriented ones, and the natural age bias in hiring ... Retirement will be forced upon the Boomers who are not financially prepared ... from the information at http://seminal.firedoglake.com/diary/40103 , 90.3% have no stock, bonds, or mutuals ... the Boomers can't sell their homes and with fewer pensions, the future looks dicey for the Boomer.

Interesting that for a vast majority of Americans, as you move up the income scale the expenses move up as well. Thus, someone making much more than 50k, say a two-income household at 100k, still is left with a small or negative net. Americans have not been very good savers.

No they haven't (saved very well). I live off a small 'allowance' I give myself. Everything else gets salted away. Friends used to make fun of me for being frugal, but not anymore. A few of them are underwater and have been for over a year and only getting worse as they've been unemployed for over a year as well. They all own houses (for now), vehicles, etc... They've burned through what little savings/401-k they had and maxed out credit cards to pay mortgage, etc... They are all getting close to filing bankruptcy (Ch7) with no other real choices unless a job suddenly materializes.

A long time ago, I used to work for a ch 7 bankruptcy firm. Personally, I don't think we're close to a top in number of bk's. There's a lot more coming.

We have a consumer culture. I too got made fun of for frugality. Everyone had a laugh when I was spending less money going out to eat then my unemployed friends. Had a Scrooge moment when I was complaining about the high price at a restaurant they had picked and I realized I made the most out of the group, half of which is unemployed. Unemployed and eating out regularly, something is wrong with that picture. Americans are addicted to spending. It's like any other hardcore drug and will lead them to the same place, in the gutter.

I am amazed at how accurately I can guess a new car owner's annual income. My metric is to simply take the price of the car they drive and multiply it by 120%. Someone driving a 2010 Ford F-150 makes ($40,000 *120%)= $48k per year. I should get a booth at the carnival.

Gah! I can't imagine paying that much of my income for a vehicle! I bought a new car last year (old one was on it's last legs) and I spent maybe 30% of my yearly income on it. And I had that in savings so I paid cash...actually I put most of it on my AmEx to squeeze the rewards points out of it (and twist the knife in the car dealer) then paid cash :)

Nope. My best friend is a pro at destroying car dealers, watching him work was pure entertainment. We went there at months end when they were DEAD, and needing to move vehicles so they don't get stuck paying as well as hitting bonuses. So they were hungry to move the car. Hammered them down hard on the price and then dropped that on them. Of course this was right around what looked like a financial collapse so I was able to secure a good deal. The guy was not happy when I did it, he just shook his head and said "Fine". I wasn't there to be nice, I was there to get a deal.

Nice. I got a wicked deal on my last vehicle, but I did notice that paying cash blew away a lot of my bargaining power. It used to be that if you wanted to buy something and asked (Waynes world style) "Do you accept... Cash?" you had bargaining power. You'd be seen as someone willing to make a deal, they either could make one or have you walk out the door with the cash.

These days they all make so much money off financing that as soon as you tell them you're not interested in financing it's like they suddenly realized you had leprosy or something.

I managed to time my purchase spectacularly though... I bought a used car with < 1000 miles on it, less than 6 months old, a couple of years left on the warranty all for about 45% less than buying it outright new. Given I was planning on paying cash anyway, I didn't bother trying to get him to take a credit card without the 2-3% fee.

Car financign is a whole other shitstorm though... Here on the radio lately one of the local dealers has been advertising "we'll finance your car even if you still owe $7500 on your trade in!!" then at the end in teh speed read fine print it explains that you'll just carry negative equity into the new loan. Brilliant.

same here. I paid 12,000 new for mine in 2003. New models were coming in for '04 and I got a great deal. no a/c, no cd player, zero upgrades, etc... Although I could pay for a much more expensive ride... why? For a car?

Yep. Driving a 98 Ford Ranger here. I plan to drive it until the wheels fall off (so far, it's held up well). Once in a while I rent a nice car for a weekend trip. That probably gets me about 90% of the overall enjoyment I'd have if I bought the thing outright.

Bought a 1994 Honda Accord 5-speed with 73,000 miles for $2,500 from my buddy's MIL . It now has 200,000+ trouble free miles. I have never owned a new car and never spent over $4,000 on a used one - and I'm very comfortable financially.

And not to dogpile on Leo, but I go into people's apts on a weekly basis here in California. I have NEVER seen so many men at home during the daytime.. BTW, the number of men aged 25 to 39 or so who play military or shot 'em up video games is unbelievable. I am always amazed that UE people would sit there seemigly all day and play video games.

Nothing more than what I can pay for in cash or 10k. Never have never will own a new car. I might have to rethink my strategy with the latest bout from toyota but the typical sweet spot is 3-5 year old accords or camry's with 30k on them. I do have a weakness for mustangs but those typically are 6 yrs old with under 50k, so i'll stay around 10k for those too.

Yup! Why take the depreciation hit? And, as in the case of Toyota, why suffer the early recalls, let someone else do that! I've never purchased a new vehicle (in addition to never having a credit card).

The last car that I bought (2001) was four years old. New it was $38k, I got it for $17k. One of the best cars I ever had. But if my current 20-year-old car dies (an econo-Toyota) I'll likely go without: I commute by bike (and, thanks to commute trip reduction incentives, actually get paid to do so!).

Thank you Sarah Palin-supporter. It's always those dang victims who are at fault.

If only that slut hadn't been brutally gang raped...obviously her fault.

If only that bystander hadn't been standing in the way of that Special Forces guy's bullet....obviously their own fault.

If only these stupid countries didn't exist so that American wouldn't have to keep invading them, destroying their populations and cultures, and robbing them of their natural resources....obviously their own dang fault.

If only there was still a period in America when 9 out of every 10 Americans didn't rate as complete airheads and could have an adult-level conversation?

"Thank you Sarah Palin-supporter. It's always those dang victims who are at fault."

[...]

"If only that bystander hadn't been standing in the way of that Special Forces guy's bullet....obviously their own fault.

"If only these stupid countries didn't exist so that American wouldn't have to keep invading them, destroying their populations and cultures, and robbing them of their natural resources....obviously their own dang fault.

"If only there was still a period in America when 9 out of every 10 Americans didn't rate as complete airheads and could have an adult-level conversation?"

Thank you, self-righteous, hypocritical, decadent, beneficiary of empire. America, as all the modern nation states of the Western Hemisphere, was built by destroying or assimilating other populations and cultures. In fact every culture and country is built upon the ruins of a predecessor. And everyone wants to live in the countries which do the best job of "robbing [neighbors] of their natural resources", whether this robbery is done by force, or by economics (see: China and the yuan), which of course is nothing but war by other means.

You are right! I was thinking the same thing. The average of Bill Gates' income and mine is something like $150 million/year :-)

Anyway, I am included in these "average" statistics, and I'm a big anomally, as I have ZERO debt, no house (low rent), an old (paid for econo-car), low energy bills (my house is set to about 55 degrees, only turning heat up in individual rooms), don't eat out much, have very few medical expenses (pretty much zero), don't buy on credit (don't have a credit card, never have had one).

Assuming you live in a town/county/state/country with a ratio of 1 bill gates to 1 you , then your comment has merit.

Obviously consumption is skewed to those in the top 10% earnings but this survey was based on "average joe". I doubt Bill Gates leaving his lights on and running a fleet of limos will skew the data. For 1 bill gates theres 10 million sheep trying to make ends meet.

Theres a reason the middle class were "fattened" up over the last 30 years. Its the same reason the Chinese want to fatten their middle class up.

1 Joe Schmoe sh*ts as often as 1 Bill Gates. Bill Gates , or any other super rich , frankly just rich , dont spend nearly enough to make up for their concentration of wealth.

Countries with just super rich and poor generally are fked. The middle class is what its ALL ABOUT. Without them its game over - and American middle class is getting the sh*t squeezed out of it right now and it didnt take this rough and ready analysis to work that out (although it helps hammer home the seriousness of the situation)

I was trying to emphasize that MEANS should be used rather than AVERAGES.

Middle classes are the rich's best defense. They also represent excess wealth: as wealth dries up it's the middle class that goes with it; the poor, alas, always remain to do the crap work for the rich.

This year’s predicted 10% rise in vehicle repos to 1.6 million would be a third higher than 10 years ago, says Thomas Webb, chief economist for a unit of Atlanta-based Manheim, which sells cars to dealers worldwide. The increase comes atop a 10% rise in repos last year.

Car and truck repossessions this year are headed for the highest level in at least a decade, thanks to easy credit and a faltering economy, says an economist for one of the largest wholesale auto auction services.

There is a reason that around that time the savings rate in this country turned negative. Americans are bad savers man who don't have the income potential to live a higher lifestyle still try to live it. Though he left out one of my favorite debts in there, student loans. Most students have them even those that don't graduate.

This will get worse as income levels drop off, taxes are increased, and the money is debased. Honestly the living standard in this country has to go down. We are not productive enough and we shipped off a lot of capital and job potential. A nation of telemarketers, real estate agents, attorneys, accounts, bankers, and Wal-Mart employees will not have an enduring strong economy and standard of living. Not happy about it but that's just reality.

Education costs are worth way less than they cost. Way less. And, there's a glut of activist degrees, which just make us look like pansies to the rest of the world. What I want to know is how many students have enslaved themselves to debt with a womyns studies degree, or some other nonsense. I hope they enjoy working at mickey D's.

One reason education costs are worthless is the stupid general distribution requirements, which are supposed to make you a well-rounded person. Half of a college degree are the courses that you just don't want to take because they hold no interest for you, and aren't relevant to your degree. They should at least recognize that those that are worthless are worth less, and charge less per credit hour for english and psych classes, etc. If you like those classes, you can always take them at a local community college for a lot less, and you can do so until the day you die.

Ah community college, the little secret of the cheapskate! I went to CC for basics and my core stuff. Classes are way cheaper and transfer just fine. In the end my degree says the same thing as the person who went to my alma matter all 4 years.

But yes most people pay more than they get out of education. Costs have risen to much, it's insane. Hell I was on a student council to fight the rising costs and waste. Got told flat out by the school president that he was raising tuition and fees because he wanted to keep his position in overall costs. Not because they needed new buildings or to pay the teachers, but because other schools raised their prices. We live in a cert world so for a lot of jobs you do need a degree, but most people don't learn anything. I was in a business class at my undergrad which was the "tie it together" class at the end...it was shameful how little they knew. All most degrees are is proof you can sit in class for a few years and not be too drunk/high.